Capacity constrained plan - Business case

Running simulation plans can help you understand how the supply chain may react when modifying the constraints.

Scenario:

Material constraint: Supplier can provide up to 70 units of a component item for each period. There is no stock available in period 0.

Resource constraint: Resources are limited and you cannot manufacture more than 55 units per time period

Simulation plan is launched with the following parameters:

Enforce capacity constraints set to "Yes"

Material and resource constraints set to "Yes"

Based on these constraints, it is not possible to meet all demands on time. The planning engine plans to fulfill sales order and forecasts late.
As resource constraint causes a late demand, you will find the following exception messages:

Resource constraint: Capacity requirements of an end demand is higher than resource capacity for a specific time period. The overload is the amount of resource capacity needed.

Late replenishment for sales order: The supplies for a sales order line are due later than the sales order line.

Which solution is the best to handle this problem? Increase resource capacity, when...? for how many units? In order to make the right decision, you can run different simulations and test different constraint parameters.
We have two possibilities: Hire new resources or temporarily increase resource capacity for a short period of time.

Hiring new resources

The new resources will be available in period 5. This will increase the resource capacity from 55 to 80 units per time period. As you can see in the graph below, this solution enables us to supply all demand. Part of the demand will be supplied across period 5 and 6 (we are limited by the supplier capacity constraint of 70 units per time period).
This solution will not allow us to fullfill all demand on time.

Temporarily increase resource capacity

What about working extra hours...? Overtime will increase your resource capacity by 10 units per time period. This solution appears to be the best one: all demand is supplied on time.

----------Please note that in our exemple, we used a very short term planning horizon to decide weather or not hiring new resources was necessary. We had no visibility on forthcoming demand and supply.